What is estate planning? Here’s what Wikipedia has to say:
Estate planning is the process of anticipating and arranging for the disposal of an estate during a person’s life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity.
It overlaps to some degree with elder law, which additionally includes other provisions such as long-term care.
Estate planning involves the will, trusts, beneficiary designations, powers of appointment, property ownership (joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety), gift, and powers of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. After widespread litigation and media coverage surrounding the Terri Schiavo case, estate planning attorneys now often advise clients to also create a living will. Specific final arrangements, such as whether to be buried or cremated, are also often part of the documents. More sophisticated estate plans may even cover deferring or decreasing estate taxes or winding up a business.
Designation of an IRA beneficiary
In the United States, without a beneficiary statement, the default provision in the custodian-agreement will apply, which may be the estate of the owner resulting in higher taxes and extra fees.
- Identity: a specific, identifiable individual must be designated as beneficiary.
- Contingent beneficiary: if the primary beneficiary predeceases the IRA owner, the contingent beneficiary becomes the designated beneficiary. If a contingent beneficiary is not named, the default provision in the custodian-agreement applies.
- Death: at the IRA owner’s death, the primary beneficiary may select his or her own beneficiaries. There is no obligation to retain the contingent beneficiary designated by the IRA owner.
- Multiple accounts: an IRA owner can split an IRA into several IRA’s each with different beneficiaries, assets and value.